The head of the Pittsburgh Symphony Orchestra has told a local grantmaking panel that the orchestra may have to seek Chapter 11 bankruptcy protection if it is unable to raise enough money to cover its expenses this season.

Gideon Toeplitz, the PSO's managing director, informed the Allegheny Regional Asset District board Tuesday night that the orchestra's deficit for the 2001-02 season -- anticipated to be more than $750,000 -- has caused the PSO to dig deeply into its operating reserves, a fund set aside to cover expenses when revenues run low.

That fund, which the orchestra relies on each year, is now running low, and its depletion could lead the orchestra to consider bankruptcy protection, Toeplitz said.

But the PSO's board president, Thomas Todd, said yesterday that Chapter 11 has never been considered by the full board or the executive committee of the board as an option.

Toeplitz, speaking to the RAD board during its annual grant request hearings, also said Pittsburgh needed to decide whether it was willing to support an orchestra of the PSO's size and quality.

"It was almost like a challenge, that the community needs to step up and help them," said RAD board member Wesley Blaha.

Yesterday, Toeplitz said he anticipates that the PSO's operating reserve will run out sometime in 2003, at which point reorganization under Chapter 11 of the U.S. Bankruptcy Code might be an option.

The PSO relies on the reserve each year because the orchestra, at the request of the foundation community, has gradually reduced the amount of money it draws annually from its endowment.

"How long the reserve will last and how much money we'll need to find [next season] will be known when the books close later this month," Toeplitz said.

The decreased value of the PSO's endowment -- which is heavily invested in the troubled stock market -- is being blamed for last year's deficit. The PSO's endowment has fallen to $93 million, compared with $133 million two years ago.

In addition, the PSO's fund-raising efforts last season fell below expectations, Toeplitz said, because the weakening economy forced corporations to cut back their giving. To offset losses, the PSO cut $1.2 million from its $30 million operating budget last season and so far has cut $500,000 from next year's budget, largely through the elimination of 10 administrative positions.

"The situation is grave," said Rudolph Weingartner, a member of the PSO board's executive committee. "But I hope this drastic move [of filing for Chapter 11] doesn't have to be made."

Some board members say the PSO must go beyond finding a short-term fix.

"The fact remains there's a fundamental imbalance between revenues and expenses, and that's what the organization really has to come to grips with," said one board member who wished to remain anonymous.

Marty Bernstein, president of the Pittsburgh Musicians' Union, which represents PSO musicians, said he hasn't been told about the bankruptcy option. The union, whose contract with the PSO expires at the conclusion of this season, will soon be negotiating a new pact.

RAD board member Joyce Baskins said she wasn't surprised to hear the orchestra was having financial problems "because a lot of the [groups funded by RAD] aren't doing well because of the economy." The PSO has requested $900,000 from RAD next year. It received $700,000 this year.

"The presentation was somber," said RAD board chairman Daniel Griffin. When he heard what Toeplitz said about a possible bankruptcy filing, Griffin said, he was surprised. "They have a huge endowment, but it's restricted. They apparently have dipped into it to whatever level they're allowed to dip in," he said.

Most arts groups have restrictions on their endowments, which function more like trust funds than savings accounts.

According to Griffin, Toeplitz said private individuals, foundations, corporations and governmental entities in Pittsburgh "don't support the symphony financially at the level that symphonies in other, comparable cities are supported." Toeplitz mentioned Cleveland and Baltimore among the cities that do more financially for their orchestras.

But many orchestras around the country -- including Cleveland's -- are strapped with deficits this year. The Tulsa Philharmonic in Oklahoma will cease operations from Sept. 12 to Oct. 5 to save money in response to a $950,000 deficit. The San Jose Symphony, $3 million in debt, filed for Chapter 11 bankruptcy protection this summer.

Other orchestras have been forced to save money on the artistic side -- something the PSO has managed to put off doing. The Cleveland Orchestra, which has a deficit of $1.3 million, was going to take Benjamin Britten's "War Requiem" to Carnegie Hall this season but has postponed doing so.

"We're doing quite well, comparatively speaking," Weingartner said, "but to do well comparatively these days is to do badly."

Caroline Abels can be reached at cabels@post-gazette.com or 412-263-2614. Post-Gazette staff writers Tom Barnes and Andrew Druckenbrod contributed to this report.